Okay…so the goal for 2020 is to grow your business like crazy. You’ve got the plan, the fancy spreadsheet, the team is motivated, the assignments are made, and you are ready to fly.
But wait…didn’t you do that last year? And the year before?
What will make this year different?
Perhaps this year, you’ll invest in the software to support each of the initiatives and keep everyone on track. Yes…software always makes the difference. Or does it? (Think about how many ‘must have’ apps on your phone you currently have or historically have had that you never/rarely use. Just sayin’!)
Perhaps there is a different question that needs to be asked. Perhaps understanding why your plans for growing the company last year didn’t pan out the way that you’d intended. Sure, you can always point to circumstances and people, but really, don’t these “unpredictable” things always happen? Isn’t there always a chance for an employee/team member quitting, a key customer leaving, an error in product delivery or an unplanned dip in cash flow?
Yep. Sure is. You’ve heard it a thousand times …there is no such thing as the perfect time to start. The thinking is that nothing will ever always be perfect, so if we want to do something, once we are fairly confident of our success, we need to push forward. In the same way, once we’ve started down the path, things will still be imperfect! Stuff will always go wrong. (That is the true purpose for fans – to distribute stuff everywhere when things go wrong!)
So…back to the question of, “why?” Think about it…if you don’t fix “why” first, you will likely end up in the same situation again. For example, if your dentist simply puts a cap on your tooth instead of dealing with the damaged root inside your mouth, while your smile might look great for a short period of time, eventually, you will have to deal with the root.
Root cause analysis is the process you would use to figure out what the underlying cause of an issue is so that a) the issue is less likely to come back and b) it does not turn into a bigger issue. An article by Washing State Department of Enterprise Services describes the basic method to use for root cause analysis as follows:
- Define the problem
- Gather information, data and evidence
- Identify all issues and events that contributed to the problem
- Determine root causes
- Identify recommendations for eliminating or mitigating the reoccurrence of problems or events
- Implement the identified solutions
So, if your goal last year was to “grow the business,” the problem would be that the business didn’t grow.
Now here’s the difference: When first asked why the business didn’t grow, we talked in terms of external impactors that got in the way of growth. Sure, that is reasonable. But what are the underlying factors that allowed the external impactors to have such a great influence on our outcomes?
- Did we plan for any alternate scenarios?
- Were some, if not all, of the issues foreseeable?
- Did we actually have a feasible plan for growth?
- Were there too many things that were out of our control?
- Did we have reasonable expectations for growth?
This is the tip of the iceberg! Don’t stop here. Keep digging!
One of the techniques the State Department article mentions is the “5-why’s,” a technique born in the 1930’s industrial revolution by one of the founders of Toyota industries. Mindtools.com goes into this technique in their article, “5 Whys: Getting to the Root of a Problem Quickly,” describing it as a simple technique to help discover the root cause of an issue. The method recommended is as follows:
- Assemble a Team
- Define the Problem
- Ask the First “Why?”
- Ask “Why?” Four more times
- Know When to Stop
- Address the Root Cause(s)
- Monitor Your Measures
One of the key takeaways from this is that for the exercise to be successful, as described above, the answers need to be factual and truly be impactors of the results. Wild guesses here will not be appropriate and will likely be unhelpful.
At the end of the day, whether using this method or one of the other root cause analysis processes, you want to understand why you or your company did not reach its goals, otherwise you are likely to be doomed to repeat them. And you will have wasted another year and suffered more unnecessary disappointment.
There was a company that was experiencing growth somewhere in the neighborhood of 80%, which lead to greater profit and access to additional capital. The owner of the company decided to take advantage of it and sought to increase the company’s growth trajectory by investing in infrastructure and marketing. Thinking that the timing (seasonality) was right, she leveraged some additional cash and moved forward full steam ahead.
- She did not anticipate losing clients
- She did not anticipate lower productivity
- She did not change course quickly enough when she saw things going a different direction than was expected
- Her goals may have been too lofty without supporting information to support the expectations
- She made long-term commitments without taking into consideration what kind of backup plan he would need if things went south.
While hindsight is 20/20 and someone more experienced might have recommended a different approach to growth, she is at the point where she must revisit her goals for the next year. She has the options of:
- being more conservative with growth, because she is terrified of falling into the same problem again, or
- truly evaluating what went wrong, analyzing the reason(s) it went wrong and determining what direction to take the company.
Perhaps neither is wrong, dependent on your perspective, but if her goal is to build an extraordinary company, option 2 is the only one that makes sense. Either way, it is more likely that taking the extra time to evaluate the root of what caused her to miss her goals, followed by careful planning including addressing those root issues will result in more successful organizational planning.
Rick Meekins is the Managing Consultant at Aepiphanni, a small business operations and strategy consultancy that exists to help small business owners CREATE | DESIGN | BUILD extraordinary businesses. Rick has helped numerous business owners craft missions and visions for their companies, organize operational procedures and educate them on management and leadership in their companies. Areas of focus include operational and strategic foci on business development – including business model design, sales and marketing, product and service life cycle, financial management (cash flow, profit and loss, sources and uses of cash, forecasting) and team development, including business architecture for both employees and contracted workers.
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